The controversial short-term rental (STR) industry and the relevant STR regulation have been in the spotlight in recent years. Despite all the pros and cons of regulating the STR industry, yet it is unclear what the real effects of the STR regulation are. This study seeks to shed light on the questions regarding how the city STR regulation and should be conceived as well as what the outcomes of the regulation implementation are. We employ a comprehensive data set assembled from multiple resources to analyze the effects of the STR regulation from different geographic levels. Indeed, STR regulation turns out to be effective in improving the STR business. Registration requirement would encourage people from affluent neighborhoods to list their properties online. And internal requirements of the listed properties are critical in preventing listings from those non-affluent neighborhoods. At the clause level, the clauses vary in their effects in different types of neighborhoods. The clause specifically requiring listing to achieve certain standards would be more efficient in crowding out the listings with low quality from the STR market. STR regulation would be able to raise the quality of the listings online and standardize the listing process. Consequently, STR regulation would reduce the information-based uncertainties exist in the online STR mediatory platforms. Overall, the results suggest that STR regulation helps release the “lemon problems” in the STR market by encouraging listings with good quality while crowd out the “bad apples” from the platforms by adjusting the STR business in different types of neighborhoods.